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2008 DIGILAW 887 (ORI)

SRI JENAMANI SHAILENDRA KR. RAY v. ORISSA STATE FINANCIAL CORPORATION

2008-09-25

B.N.MAHAPATRA, B.S.CHAUHAN

body2008
JUDGMENT : B.S. Chauhan, C.J. - This writ petition has been filed seeking the following reliefs: (a) issue rule nisi directing the opposite parties to show cause as to why the Corporation shall not proceed against the opposite party No. 3, his property and the guarantor instead of against the Petitioner to realize its dues; (b) as to why the Petitioner's land as per the Schedule given below shall not be released by the Corporation; and (c) as to why the notice advertising sale of the schedule property vides Annexure-9 shall not be quashed. 2. The facts and circumstances giving rise to the case are that on 28/30.12.1991 a term loan for a sum of Rs. 2,00,000 was sanctioned in favor of the Petitioner for purchasing a mini truck and the amount was released. The Petitioner had mortgaged landed property as collateral security to secure the aforesaid loan and in addition thereof, he has also given additional security of Rs. 10,000 in the shape of Kissan Vikash Patra. The Petitioner could not make repayment as per the agreement between the parties. He made a proposal to transfer the vehicle in favor of opposite party No. 3. While taking note of his letter, opposite parties 1 and 2 sent a proposal on 3.10.1996 for acceptance of the Petitioner on the stipulated terms and conditions. (Annex-2). Petitioner claimed to have agreed for the said terms and in pursuance thereto, a Tri-partite agreement was executed between the parties, where Petitioner stood as guarantor for the opposite party No. 3. Opposite party No. 3 also mortgaged certain immovable property with opposite party Nos. 1 and 2. However, the opposite party No. 3 also failed to make deposit of the installment. Therefore, a demand notice dated 20.8.2002 (Annex-4) was sent to the Petitioner as well to opposite party No. 3 to make the payment of outstanding dues to the tune of Rs. 3,88,710.04. 3. A similar demand had been sent to the Petitioner as well as opposite party No. 3 vides letter dated 31.10.2002 (Annex-5). In response to the said letter the Petitioner vide his letter dated 6.11.2002 denied of having executed any documents with the Corporation altogether and thus asked the opposite parties 1 and 2 not to make any recovery from him. Opposite parties 1 and 2 advertised the property for auction sale in newspaper 'Samaj' on 6.4.2005. Hence this petition. 4. In response to the said letter the Petitioner vide his letter dated 6.11.2002 denied of having executed any documents with the Corporation altogether and thus asked the opposite parties 1 and 2 not to make any recovery from him. Opposite parties 1 and 2 advertised the property for auction sale in newspaper 'Samaj' on 6.4.2005. Hence this petition. 4. Sri Santanu Kr. Sarangi, Learned Counsel for the Petitioner has vehemently argued that once fresh agreement had been reached, the vehicle as well as the liability stood transferred to opposite party No. 3 and he also mortgaged the immovable property, No. recovery can be made from the Petitioner. The Petitioner had entered into the agreement as a guarantor and opposite party No. 3 had to make entire dues within twelve monthly instalments, liability of the Petitioner would come to an end automatically on expiry of one year. More so, Clause-25 of the proposal (Annex-1) being harsh and unreasonable, as well as the letter dated 3.10.1996 are liable to be quashed. It is further submitted that as after reaching tri-partite agreement in 1996, there has been variance in the contract as the opposite party No. 3 had been advanced another loan by virtue of the provisions of Section 133 of the Contract Act, the liability of the guarantor vanishes. More so, unless the recovery is made from the borrower, No. proceeding for recovery can be initiated against the guarantor. Thus, the petition should be allowed and the reliefs sought for by the Petitioner be granted. 5. On the contrary, Sri Sankarsan Rath, Learned Counsel appearing for opposite parties 1 and 2 has vehemently opposed the petition contending that a proposal cannot be quashed as it was for the consideration of the Petitioner to accept the said condition or not. The copy of the agreement had not been filed. If such a condition has been incorporated in the contract, that cannot be quashed for the reason that copy of the agreement is not before the Court. Petitioner cannot be permitted to resile from his agreement for the reason that had he has not agreed upon such terms, the transfer of the vehicle could not have been made in favour of opposite party No. 3 and recovery could have been made from the Petitioner in 1996 itself. Petitioner cannot be permitted to resile from his agreement for the reason that had he has not agreed upon such terms, the transfer of the vehicle could not have been made in favour of opposite party No. 3 and recovery could have been made from the Petitioner in 1996 itself. The question of application of the provisions of Section 133 of the Contract Act providing for certain safe guards, i.e. No. liability of the guarantor in case there is any variance in the contract without the consent of the guarantor, he cannot be fastened with the liability which had arisen subsequent to the variance did not arise in this case. In the instant case, the Petitioner had entered into a fresh tri-partite agreement and had also executed a collateral deed on 19.2.1997. Petitioner after taking benefit of the agreement cannot be permitted to challenge any of the condition contained therein. Therefore, he cannot take such a plea and the petition is liable to be dismissed. 6. We have considered the rival submissions made by the parties and perused the record. 7. Admittedly, a copy of the proposal sent by the bank for consideration of the Petitioner has been filed as Annexure-2. The relevant clauses of the said proposal read as under: (1) The vehicle along with entire loan liability as on the date of execution of documents (subject to reconciliation) shall be taken over by the transferee Sri Bibhuti Bhusan Sahoo. (2) The down payment shall be Rs. 60,000 (Rupees Sixty Thousand only) including the amount if any already deposit. Out of this Rs. 60,000 the transferee shall deposit Rs. 50,000 before documentation for mutual transfer and Rs. 10,000 shall be deposited by end of November, 1996. (3) Balance outstanding after appropriation of the down payment shall be repaid in one year by 12 monthly installments starting from December, 1996. (13) For the balance loan the transferee should offer collateral assets/FDR equivalent to 100% of the loan amount outstanding in shape of land/building/fixed deposit/NSC/NSS etc. (25) Existing mortgage given by the original borrower shall continue till liquidation of the loan dues in addition to 100% collateral security to be given by the transferee through fresh legal documentation. 8. It is admitted that subsequent to the acceptance of the terms and condition, a tri-partite agreement had been executed between the parties. Copy thereof has not been filed. 9. 8. It is admitted that subsequent to the acceptance of the terms and condition, a tri-partite agreement had been executed between the parties. Copy thereof has not been filed. 9. In Surinder Singh Vs. Central Government and Others the Supreme Court has held that the High Court cannot pass an order in such a case in absence of the impugned order being on record. The Apex Court observed as under: In absence of order under challenge, the High Court could not quash the same. Normally whenever an order of the Government or some authority is impugned before the High Court under Article 226 of the Constitution, copy of the order must be produced before it. In absence of' impugned order it would not be possible to assign the reason which have impelled the authority to pass the order. It is therefore, improper to quash an order which is not produced before the High Court in a proceeding under Article 226 of the Constitution. 10. As the copy of the agreement has not been filed by either of the parties, Clause-25 thereof cannot be quashed. 11. Even otherwise, it cannot be quashed for the simple reason that the Petitioner had agreed for certain terms with his eyes open and signed the agreement. The agreement had been acted upon and Petitioner has taken benefit thereof, it will not been permissible for him to challenge such a condition. Had he not entered into a tri-partite agreement, opposite parties 1 and 2 could have made recovery from him in 1996 itself. 12. Acquiescence, being,the principle of equity, must be made applicable in a case where the order has been passed and complied with without raising any objection. 13. A Constitution Bench of the Supreme Court, in Pannalal Binjraj Vs. Union of india (UOI) had explained the scope of estoppels observing that once an order is passed against a person and without raising any objection he submits to the jurisdiction or complies with such order, he cannot be permitted to challenge the said order merely because he could not succeed there, for the reason that such conduct of that, person would disentitle him for any relief before the Court. A similar view has been reiterated by the Supreme Court In Manak Lal Vs. Dr. Prem Chand, ; Maharashtra State Road Transport Corporation Vs. A similar view has been reiterated by the Supreme Court In Manak Lal Vs. Dr. Prem Chand, ; Maharashtra State Road Transport Corporation Vs. Balwant Regular Motor Service, Amravati and Others, ; State of Orissa and others Vs. Narain Prasad and others, etc. etc., ; Power Control Appliances and Others Vs. Sumeet Machines Pvt. Ltd., ; State of Rajasthan and Ors. v. Anil Kumar Sunil Kumar and Party and Anr. AIR 2000 SC 1441 ; State of Punjab and others Vs. Krishan Niwas, ; and Union of India and Another Vs. N. Chandrasekharan and Another, . 14. Inaction in every case does not lead to an inference of implied consent or acquiescence as has been held by the Apex Court in P. John Chandy and Company (P) Ltd. Vs. John P. Thomas. Thus, the Court has to examine the facts and circumstances in an individual case. 15. In the instant case, it was not a case of inadvertence or negligence, rather positive act on behalf of the Petitioner that he had executed an agreement and taken the benefit thereof. Therefore, we are not in a position to accept the submissions made by Sri Sarangi in this regard. 16. Sri Sarangi has submitted that recovery cannot be made from the Petitioner merely being a guarantor unless attempt is made to recover the amount from the opposite party No. 3, the principal borrower. 17. Liability of the guarantor is co-extensive to that of principal debtor and that amount can be recovered from the guarantor without being recovered from the principal debtor in view of the provisions of Section 128 of the Contract Act and it is not permissible for the guarantor to agitate such a issue. ( Vide Bank of Bihar Ltd. Vs. Dr. Damodar Prasad and Another, and State Bank of India Vs. Saksaria Sugar Mills Ltd. and Others, .) 18. Similar view has been reiterated in State Bank of India Vs. Messrs. Indexport Registered and others, by the larger Bench overruling its earlier judgment in Union Bank of India Vs. Manku Narayana, ; wherein it has been held that the bank has to proceed against the mortgaged property of the borrower first and then proceed against the guarantor. 19. A Division Bench this Court in Sukur Pradhan and Others Vs. Messrs. Indexport Registered and others, by the larger Bench overruling its earlier judgment in Union Bank of India Vs. Manku Narayana, ; wherein it has been held that the bank has to proceed against the mortgaged property of the borrower first and then proceed against the guarantor. 19. A Division Bench this Court in Sukur Pradhan and Others Vs. Orissa State Financial Corporation and Others, held that the guarantor can be asked by the creditor first, to make a recovery, without exhausting all the remedies against the principal debtor. The Court held as under: From the aforesaid decisions which run from 1917 to 1992, it is apparent that a surety is liable to the creditor irrespective of the remedy which the creditor may have against the principal debtor and the creditor may proceed against the surety without exhausting his remedies against the principal debtor. 20. Thus, submissions made in this regard remained untenable and not worth acceptance. 21. It has further been urged by the Learned Counsel appearing for the Petitioner that subsequently there has been variance in the agreement without the consent of the Petitioner and therefore by virtue of the provisions of Section 133 of the Contract Act, Petitioner is not liable to make any payment. Mr. Sarangi has placed heavy reliance upon the judgment in AIR 1935 21 (Privy Council); Union of India (UOI) Vs. Narayanasetti Jugadeswararao and Others, ; S. Perumal Reddiar Vs. Bank of Baroda and Others, and The Indian Bank, Madras Vs. S. Krishnaswamy and others, .) 22. However, to enter into that controversy is totally irrelevant in the facts and circumstances of the case as the Respondents counsel Mr. Rath has produced the deed of guarantee executed by the Petitioner himself on 19.2.1997 and thereafter further loan had been advanced to opposite party No. 3 by the opposite parties 1 and 2 only when the Petitioner stood as a guarantor. Thus, it is not permissible for him to submit that there was any variance. Even if, the additional loan had been sanctioned that does not amount to variance to earlier contract, rather it can be treated as a separate contract. 23. In view of the above, as the Petitioner stood guarantor and having co-extensive liability, he is liable to make the payment in spite of the fact that recovery is not being made from the principal borrower, opposite party No. 3. 23. In view of the above, as the Petitioner stood guarantor and having co-extensive liability, he is liable to make the payment in spite of the fact that recovery is not being made from the principal borrower, opposite party No. 3. Petitioner cannot be permitted to challenge the terms and conditions incorporated in the agreement, if any, for which he had agreed and the agreement has been acted upon and Petitioner himself has been beneficiary thereof. 24. Petitioner is definitely guilty of taking incomplete and inaccurate pleadings. The Supreme Court In Re: Sanjiv Datta and Others while dealing with the similar issue, held as under: Some members of the profession have been adopting perceptibly casual approach to the practice of the profession, as is evident from their absence when the matters are called out, the filing of, incomplete and inaccurate pleadings, many times even illegible and without personal check and verification, the non-payment of court fees and process fees, the failure to remove office objections, the failure to take steps to serve the parties, yet all. They do not realize the seriousness of these acts and omissions. They not only amount to the contempt of the Court but do positive dis-service to the litigants and create embarrassing situation in the court leading to avoidable unpleasantness and delay in the disposal of matters. This augurs ill for the health of our judicial system. (Emphasis added) 25. It is evident from the above that the Petitioner has taken incomplete pleadings but also has the audacity to file the petition suppressing the material facts that he has also executed the Deed of Guarantee on 19.2.1997. The loan had been advanced in 1991 i.e. seventeen years ago and the amount could not be recovered by the Corporation. Petitioner has obtained the interim relief misleading the Court dated 2.6.2005 and enjoyed the same. 26. When a person approaches a Court of Equity in exercise of its extraordinary jurisdiction under Article 226/227 of the Constitution, he should approach the Court not only with clean hands but also with clean mind, clean heart and clean objective, (Vide The Ramjas Foundation and Others Vs. Union of India and Others, ; K.R. Srinivas Vs. R.M. Premchand and Others, ). Thus, who seeks equity must do equity. Union of India and Others, ; K.R. Srinivas Vs. R.M. Premchand and Others, ). Thus, who seeks equity must do equity. The legal maxim "Jure Naturae Aequum Est Neminem cum Alterius Detrimento Et Injuria Fieri Locupletiorem", means that it is a law of nature that one should not be enriched by the loss or injury to another. 27. Similarly, judicial process should not become an instrument of oppression or abuse of a means in the process of the Court to subvert justice for the reason that the interest of justice and public interest coalesce. The Courts have to weigh the public interest vis-a-vis private interest while exercising their discretionary powers. Easy access to justice should not be misused as a license to file misconceived and frivolous petitions. (Vide Noorduddin Vs. Dr K.L. Anand, ; Dr. Buddhi Kota Subbarao Vs. K.Parasaran and others, ; and Ramniklal N. Bhutta and another Vs. State of Maharashtra and others, ). 28. In Tilokchand and Motichand and Others Vs. H.B. Munshi and Another, ; State of Haryana and Others Vs. Karnal Distillery Co. Ltd. and Another, ; and Sabia Khan and Others Vs. State of U.P. and Others, the Hon'ble Apex Court held that filing totally misconceived petition amounts to abuse of the process of the Court and such litigant is not required to be dealt with lightly, as petition containing misleading and inaccurate statement, if filed, to achieve an ulterior purpose amounts to abuse of the process of the Court. 29. In Agricultural and Processed Food Products Vs. Oswal Agro Furane Ltd. and others, the Apex Court had taken a serious objection in a case filed by suppressing the material facts and held that if a Petitioner is guilty of suppression of very important fact and his case cannot be considered on merits. Thus, a litigant is bound to make "full and true disclosure of facts". Oswal Agro Furane Ltd. and others, the Apex Court had taken a serious objection in a case filed by suppressing the material facts and held that if a Petitioner is guilty of suppression of very important fact and his case cannot be considered on merits. Thus, a litigant is bound to make "full and true disclosure of facts". While deciding the said case, the Supreme Court had placed reliance upon the judgment in King v. General Commissioner (1917) 1 KB 486, wherein it has been observed as under: Where an ex parte application has been made to this Court for a rule nisi or other process, if the Court comes to the conclusion that the affidavit in support of the application was not candid and did not fairly state the facts, but stated them in such a way as to mislead the Court as to the true facts, the Court ought, for its own protection and to prevent abuse of its process, to refuse to proceed any further with the examination of its merits.... 30. In Abdul Rahman Vs. Prasony Bai and Another, ; and S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar and Others the Supreme Court held that whenever the Court comes to the conclusion that the process of the Court is being abused, the Court would be justified in refusing to proceed further and refuse relief to the party. This rule has been evolved out of need of the Courts to deter a litigant from abusing the process of the Court by deceiving it. However, the suppressed fact must be material one in the sense that had it not been suppressed, it would have led any fact on the on the merit of the case. 31. Legal maxim "Juri Ex Injuria Non Oritur" means that a right cannot arise out of wrong doing, and it becomes applicable in case like this. 32. It is a settled proposition of law that a false statement made in the Court or in the pleadings, intentionally to mislead the Court and obtain a favorable order, amounts to criminal contempt, as it tends to impede the administration of justice. A Constitution Bench of the Supreme Court in Naraindas Vs. 32. It is a settled proposition of law that a false statement made in the Court or in the pleadings, intentionally to mislead the Court and obtain a favorable order, amounts to criminal contempt, as it tends to impede the administration of justice. A Constitution Bench of the Supreme Court in Naraindas Vs. The Government of Madhya Pradesh and Others, has held as under: Now there can be No. doubt that if a wrong or misleading statement is deliberately and willfully made by a party to a litigation with a view to obtain a favorable order, it would prejudice or interfere with the due course of the judicial proceeding, and thus, amount to contempt of court. 33. In Advocate-general, State of Bihar Vs. Madhya Pradesh Khair Industries and Another the Apex Court held that every abuse of the process of the Court does not necessarily amount to contempt of Court, but a calculated attempt to hamper the due course of the judicial proceeding or administration of justice shall definitely amount to contempt of the Court, and in such a case, punishment to the contemnor is necessary to prevent the abuse and making a mockery of the judicial process, as it adversely affects the interest of the public in the administration of justice. The Court further held as under. The public have an interest, an abiding and a real interest, and a vital stake in the effective and orderly administration of justice, because, unless justice is so administered, there is the peril of all rights and liberties perishing. The Court has the duty of protecting the interest of the public in the due administration of justice, and so, it is entrusted with the power to commit for contempt of Court, not in order to protect the dignity of the Court against insult or Injury as the expression 'contempt of Court' may seem to suggest, but, to protect and to vindicate the right of the public that the administration of justice shall not be prevented, prejudiced, obstructed or interfered with. 34. In The Secretary, Hailkandi Bar Association Vs. State of Assam and Another the Apex Court held that filing inaccurate documents deliberately, with a view to mislead the Court, amounts to interference with the due course of justice by attempting to obstruct the Court from reaching a correct conclusion, and thus, amounts to contempt of Court. 35. 34. In The Secretary, Hailkandi Bar Association Vs. State of Assam and Another the Apex Court held that filing inaccurate documents deliberately, with a view to mislead the Court, amounts to interference with the due course of justice by attempting to obstruct the Court from reaching a correct conclusion, and thus, amounts to contempt of Court. 35. Similar view has been reiterated by the Apex Court in Dhananjay Sharma Vs. State of Haryana and Others, and Rita Markandey Vs. Surjit Singh Arora observing that deliberate attempt to impede the administration of justice or interference or tending to interfere with or obstruct, or tend to obstruct the administration of justice, in any manner, amounts to criminal contempt. 36. In Afzal and another Vs. State of Haryana and others, ; and Mohan Singh Vs. Late Amar Singh Thr. The Lrs. the Apex Court held that a false and a misleading statement deliberately and willfully made by a party to the proceedings to obtain a favorable order, amounts to prejudice or interference with the due course of judicial proceedings, and it will amount to criminal contempt. The Court further held that every party is under a legal obligation to make truthful statement before the Court, for the reason that causing obstruction in the due course of justice "undermines and obstructs the very flow of the unsoiled stream of justice, which has to be kept clear and pure, and No. one can be permitted to take liberties with it by soiling its purity". 37. In view of the above, this Court is fully satisfied that the Petitioner has abused the process of the Court and thus not entitled for any equitable relief. 38. Petition being devoid of any merit, is accordingly dismissed. The interim order dated 2.6.2005 stands vacated. B.N. Mahapatra, J. 39. I agree. Final Result : Dismissed